Rudin's proptech firm is not your typical startup

With a scorching-hot weekend approaching in July, Mayor Bill de Blasio ordered all commercial buildings to set their air conditioning to 78 degrees by midday that Friday. The Rudin Family reacted quickly, using Nantum, a technology it developed, to pump extracold air into its properties in the morning; other landlords had to adjust their thermostats one by one.

The next day, a Con Edison power outage on the Upper West Side led to a brownout at Rudin's 3 Times Square. The power faltered, then came back at a much higher voltage than expected. With Nantum watching every spike, Rudin kept much of its equipment offline, preventing what could have been expensive damage.

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Proptech—the business of disrupting real estate with technology—has swept the city, with some companies achieving $1 billion valuations.

In most cases, a tech-oriented person who has dabbled in real estate comes up with an idea and gets venture money to launch a firm. Rudin subsidiary Prescriptive Data is different because it was developed by one of the city's most prominent real estate families and is growing without the usual financial incentives, notably stock options.

The number of companies like Rudin that have pushed into proptech can be counted on one hand. "It is really uncommon to see a traditional player, especially a multigenerational real estate company, have the interest and capabilities and commercialize it," said Aaron Block, co-founder of MetraProp and an expert on the sector.

Prescriptive Data is also under a clear corporate mandate from Rudin's CEO. "If it doesn't help me recruit or retain tenants, get rid of it," Bill Rudin told John Gilbert, his chief operating officer and the driving force behind Nantum. So far it is meeting that objective.

Nantum originated from the 2009 Obama stimulus package, which earmarked money to create a smart electric grid. Con Ed summoned some of the city's top landlords to a meeting to figure out what could be done. Rudin, which created the city's first internet-connected building, 55 Broad St., in the 1990s, was interested.

Con Ed wanted to know if Rudin could program its elevators to go to the nearest floor if the company were warned 30 seconds ahead of a power interruption. Sure, Gilbert said, a little glibly.

With a colleague, he went to a nearby pizzeria. "How do we do that?" he asked, then took out his phone. "With an operating system."

More than $20 million in investment later, Nantum is operating in 22 Rudin office and residential buildings. Prescriptive Data has signed up 13 other building owners—including Rudin rivals and some institutional owners, such as JPMorgan Chase.

Nantum works like an operating system that can control and work with other systems, such as leak detection, occupancy and security. But its biggest impact is on energy use. Rudin has fine-tuned Nantum so it can save power when office workers leave for lunch or depart early on Fridays.

Mission-driven

Rudin made Prescriptive Data a wholly-owned subsidiary with Gilbert as chairman and recruited Sonu Panda to be CEO. Its 24 employees work about a block from Rudin's Park Avenue headquarters.

Rudin made Prescriptive Data a wholly-owned subsidiary with Gilbert as chairman and recruited Sonu Panda to be CEO, who had launched and sold two tech companies and didn't need another big financial score. Its 24 employees work about a block from Rudin's Park Avenue headquarters.

At some point Rudin will need to transform Prescriptive Data into a more traditional tech company by bringing in outside money and selling it or taking it public. Despite enormous competition for tech talent, Sonu's finding people who don't seem that concerned with big paydays.

Katie Peters grew up in Maine, studied design at Roger Williams University in Rhode Island and moved to New York. She was an early hire at database company MongoDB, doing design work. She was so taken with the enthusiasm the engineers had for their job, however, that she retrained herself as a software developer. A recruiter for Prescriptive Data came calling.

"It was very different from a lot of other jobs I was considering," she said. "Huge potential to reduce energy consumption by using data to make buildings more efficient. A real estate company doing good."

She says money isn't her priority, and she certainly missed an opportunity for big cash by leaving MongoDB. The stock went public in late 2017 at $24 a share, and she cashed in her options, but nothing like she could have made if she had stayed. Mongo DB is now trading at $150.

Nantum's biggest opportunity may come from the tough climate-change law passed by the City Council this year requiring a 40% reduction in large building emissions by 2030 and an initial cut by 2024.

"Nantum and systems like it are going to be an absolute necessity come 2024, when buildings will be measured on their carbon emissions, and they are going to have to install sophisticated controls," said David Pospisil, a strategic energy adviser at Con Edison. "Building owners who don't, especially those in B and C buildings, are going to get hurt."

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